Insurable interest (an insurance contract is
valid only if the policyholder has a financial
interest in the person or property covered by the
insurance)

Actual cash value (indemnification is governed
by the notion that only the actual dollar loss is
reimbursed - the amount of money needed to replace
or damage property)

Other insurance (prevents multiple claims to
different insurance companies for the same incident,
eliminating the possibility of overpayment for the
loss)

Face amount (sets a maximum amount that the
insurer is required to pay the insured)

Co-insurance (specifies the sharing of costs
between the insured and the insurer - an example is
a health insurance policy with an 80/20 co-insurance
clause, meaning that the insurer pays 80 percent of
the medical bills and the insured pays 20 percent up
to a maximum amount)

Subrogation (if your loss is caused by someone's
negligence, you get reimbursed, or indemnified, but
your insurance company has the right to sue the
guilty party to recoup the loss)

Brenda Procter, M.S., Consumer and
Family Economics, College of Human Environmental
Sciences, University of Missouri-Columbia

If you'd like to learn more about this and other
personal finance topics, the University of Missouri
offers 'Personal & Family Finance,' a correspondence
course, through the Center for Distance and Independent
Study (800-609-3727). Information about this course is
available at
http://cdis.missouri.edu/CourseInfo/DetailCourseInfo.asp?1985.